Wednesday, August 7, 2013, 11:50 AM

City of Asheville and State Play Game of "Marco Polo" Over Water System Ownership

We've written here and here about the ongoing legal dispute between the North Carolina General Assembly and the City of Charlotte over the ownership and operation -- well, now, it appears, only the operation -- of the Charlotte Douglas International Airport.

Another, similar legal dispute is ongoing between the North Carolina General Assembly and the City of Asheville over the ownership and operation of the City's water supply and distribution system.  So similar, in fact, that it's been reported the same lawyer from the Attorney General's office is representing the State -- or, more specifically, the North Carolina General Assembly -- in both legal tilts.

The Pont du Gard on the Biltmore Estate, a spur of the Asheville water system.  That Vanderbilt guy really wanted a green lawn.

The Background
The background is relatively simple.  On May 14, 2013, the North Carolina General Assembly adopted Session Law 2013-50, originally introduced as House Bill 488.  The law created "Metropolitan Water and Sewerage Districts" and served to transfer all the assets and debts of the water supply and distribution system owned and operated by the City -- which the City had done for more than 100 years -- to a Metropolitan Water and Sewerage District.  The law does not mention the City by name, and it does not apply only to the City, but its effect was to change ownership and operation of the Asheville water supply and distribution system, which is what this post concerns.

A co-sponsor of the legislation, Rep. Chuck McGrady (R-Henderson) explained part of the reasoning behind the law:  "Asheville has a history of using water as a weapon against its neighbors that has precipitated several interventions by the legislature."

The law was to take effect on May 15, 2013.

The Lawsuit
On May 14, 2013, the eve of the law's effect though after its adoption, the City filed a lawsuit against the State.  In the suit, the City claimed the law (1) is a constitutionally prohibited local act or special enactment in violation of the North Carolina Constitution, (2) is discriminatory, arbitrary, and capricious, without any rational basis, in violation of the "Law of the Land" Clause of the North Carolina Constitution, (3) is an invalid exercise of the powers of condemnation in violation of the North Carolina Constitution, (4) impairs contractual obligations evidenced by bonds in violation of the United States Constitution, (5) impairs contractual obligations evidenced by bonds in violation of N.C.G.S. 159-93, (6) in the alternative, is a taking requiring the payment to the City of just compensation in excess of $1 billion.

The lawsuit seeks injunctive relief against State and the transfer of the assets, and is accompanied by a motion for a temporary restraining order.

The TRO  
On May 14, 2013, after a hearing, the Superior Court granted the TRO preventing the law's operation against the City of Asheville and its water distribution and supply system.

The May 14 TRO was set to expire within 10 days of its issuance, which is by rule.  However, the City and the State have extended the TRO until September, at least, when the parties will next appear in Superior Court to argue the merits of an injunction against the law.  Until then, the TRO remains in place and the City remains in ownership and in control of its water distribution and supply system.

What's Next
Well, like we said, a hearing on the merits of an injunction is next, probably in September.  Until then, the City can build its case and the public can react -- positively or negatively -- to the continued impacts on local governments from the State level.

We'll follow this as it flows.

Mike Thelen practices in Womble, Carlyle's Real Estate Litigation and Land Use practice group. He regularly represents a wide variety of clients, from local governments to businesses, in land use and land development matters in both state and federal venues throughout North Carolina.  Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw and "like" us on Facebook here.

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